SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
LITIGATION RELEASE NO. 15264 / February 25, 1997
SECURITIES AND EXCHANGE COMMISSION v. GEORGE CHELEKIS, KGC, INC.,
AND HOT STOCKS REVIEW, INC., Civil Action No. 97CV-00374 (D.D.C.)
(filed February 25, 1997)
On February 25, 1997, the Commission filed a complaint in
the United States District Court for the District of Columbia
against George Chelekis ("Chelekis"), KGC, Inc. and Hot Stocks
Review, Inc. The complaint alleges that from at least January
1995 through August 1995, Chelekis, a publisher who distributes
various investment newsletters, known as the "Hot Stocks"
publications, over the Internet and in print format, knowingly or
recklessly made materially false and misleading statements
concerning six publicly-traded companies. The complaint further
alleges that from April 1994 through September 1995, Chelekis
failed to disclose in the Hot Stocks publications that he and
entities that he controls, defendants KGC, Inc. and Hot Stocks
Review, Inc., received at least $1.1 million from more than 150
issuers, and 275,500 shares of stock from 10 issuers, as payment
for recommending securities of such issuers in the Hot Stocks
publications.
Without admitting or denying the allegations in the
complaint, Chelekis, KGC, Inc. and Hot Stocks Review, Inc.
consented to the entry of a final judgment permanently enjoining
them from violating Section 10(b) of the Securities Exchange Act
of 1934, and Rule 10b-5 thereunder, and Section 17(b) of the
Securities Act of 1933. The final judgment orders the defendants
to pay a total of $162,727, representing $75,050 in disgorgement,
$12,627 in prejudgment interest and a $75,050 civil penalty.